"The debate here has, I would have to say, been overly focused on budget outcomes in particular years. The real issues are medium-term ones," the RBA head said as he referred to Mr Parkinson's speech on Wednesday.

"Put simply, there are things we want to do as a society, and have voted for, that are not fully funded by taxes over the medium term, as is starting to become clear in the lead up to the May budget.

"Our situation is not dire by the standards of other countries but neither are the issues trivial. A conversation needs to be had about this."

Mr Parkinson said on Wednesday evening that Australians should expect an increase in the goods and services tax (GST) if the budget was to return to a surplus.

Advertisement

The call for a GST increase was flatly rejected by the federal government on Thursday. A spokeswoman for Treasury Joe Hockey said: "We are not changing the GST – full stop, end of story."

Mr Stevens said it was important to drive the conversation about fiscal policy away from the "growth versus austerity" debate towards pursuing agendas that "spur growth potential, which would mean, among other things, that the accommodative policies of central banks could get more traction".

You will now receive updates fromBusiness AM Newsletter

Business AM Newsletter

He added that reforms and policies that spur growth weren't always on the to-do list of governments.

"There is something of a tendency for governments, when asked to outline their growth plans, to list the things that they already want to do for political reasons, and then to claim that they will help growth," Mr Stevens said.

"Some of those things may well help growth, but in fact many of the things that are needed to spur growth seem not to make it onto such lists."